All Forum Posts by: Tushar P.

There's a few good cases on this subject under IRC Sec 1402 as well.  Although the legislative history is different, it's helpful in this situation to examine that case law body.

I believe the courts today would agree with and implement a functional equivalence test that examines state law, the operating/partnership agreement, and defacto treatment and actions of the member/partner. And, that's usually what I advise on when we encounter these challenges. For example, we might want to find that an LLC member in a rental real estate syndication is NOT the functional equivalent of a limited partner under IRC Sec 469. On the other hand, we might want to find that another LLC member in a hotel syndication IS the functional equivalent of a limited partner under IRC Sec 1402.

I generally agree with Ashish on Thompson.  Garnett is a little incomplete but that shouldn't be surprising as it's from 2009.  There are better and more recent cases, particularly on the 1402 side.

I think we can all agree that an LLC member is not automatically the functional equivalent of an LP based on any one facet of fact and circumstance. A holistic examination of the facts and circumstances is required.

@Tushar P.

Probably not.  Although I think finding a loser that makes hard working peoples life hell would be easy to find.  Probably not as much here on BP where most folks seem to be taking their life into their own hands.  What we need is someone that considers themselves a victim and therefore can justify doing whatever is necessary from getting off their own ***.  Places like CA not only have those these people in abundance they are used and don’t even know it.    Maybe we could give a professional tenet a bong hit to tell us what it would take to get him to leave in this situation.

Agree regarding the first year tax benefits. One strategy is to get a STR towards the end of the year to make sure your material participation hours (100) are greater than any other person (ie. cleaners). It is easier to control hours when you have limited months, get your tax benefits, and then can switch over to PM next year since the losses are mainly for first year. Rinse and repeat. This seems like the easiest way for a full-time W2 employee to enjoy some of the extra tax benefits to shelter active income without getting REPs.

Why do you assume the only way to 'defer' taxes (as you say) is by buying junk? I agree with you and @Michael Plaks that one should focus more on increasing income and cash-flow more than on decreasing taxes, but tax strategy certainly should not be overlooked or taken lightly.  

If I was in the OPs situation with such a high tax bill, I would also be looking to use strategies like cost seg to save 6 figures in taxes, and use that money to buy more income producing property. Keep that method going each year as much as possible, so even if several years down the road when you sell a property and have a tax bill, it will be far less of a hit, because you have used the tax free money to compound your wealth over the years. What that has to do with 'junk properties', feel free to explain yourself.

 Probably the suburban areas then like Argyle, Roanoke, Benbrooke, Weatherford.

Wow, thank you BP community for all of the valuable advice.  You’ve all given me a lot to think about and I feel confident now about passing this one up.  The point on syndications is well taken.  Definitely something I’m doing my research on!